Typically, when purchasing life insurance, the policyholder and insured are the same person. But if your finances would be negatively impacted by the death of say your spouse or business partner, you may be wondering if it’s possible to purchase a life insurance policy on someone else. While it is common and possible to purchase life insurance on someone else, there is a strict criteria that must be met in order for a carrier to grant coverage. Here’s what to know about purchasing a life insurance policy on someone else.
Why would you want to buy life insurance on someone else?
While you can’t buy life insurance on just anyone, there are many instances in which a person’s finances could be negatively affected by the death of someone close, leading them to want to buy life insurance on someone else. Life insurance is a way to make sure your financial stability—and the financial stability of your loved ones—is protected if anything were to happen to you. When you purchase a life insurance policy on someone else, you are protecting yourself from the financial consequences that could come from the death of that person.
What is insurable interest?
A person has an insurable interest if upon the death of an insured individual, that person would suffer a financial loss due to the insured’s death. This is what carriers look for when determining whether they can give you a life insurance policy on someone else.
How Buying Life Insurance on Someone Else Works
When buying a life insurance policy on someone else, you have to prove that their death would negatively impact your finances. The life insurance application process will be similar to if you were purchasing the policy on yourself. The insured individual would have to provide their consent, as well as undergo a medical exam and the typical underwriting process. The main difference in this shopping and purchasing process is that the insured is not the policyholder.
Who You May Consider Buying a Life Insurance Policy For
There are a variety of situations in which purchasing a life insurance policy on someone else could be beneficial. Examples of who you may consider buying a life insurance policy for include:
- Your Child
- Your Business Partner
- Your Spouse/Partner
- Your Parents
- Your Sibling
- Your Ex-Spouse
SelectQuote Can Answer Your Life Insurance Policy Questions
Whether you are looking to purchase a life insurance policy for yourself or for someone else, SelectQuote can walk you through the process. We work with some of the nation’s most trusted life insurance companies and can provide coverage and cost comparisons in just minutes to help you find the right coverage with the right carrier at the right price for you.